Over a million KiwiSavers missing out on easy 50% returns
Mon, Jun 17, 9:30 AM (1 day ago)
5 am Tuesday, 18 June
Apathy costing a million KiwiSavers, big bucks
PocketWise, the online financial product comparison site, is calling on KiwiSavers to ensure they have contributed enough into their account to earn the full benefit of Government rebates. KiwiSavers who have contributed at least $1,042.86 into their account by 30 June, stand to receive an additional top up of $521.43 into their account – a 50% return on their contribution.
“To help savers, the Government makes an annual contribution towards your KiwiSaver account as long as you are a contributing member aged 18 or over” says Binu Paul, co-founder of PocketWise. “With about a million or so KiwiSaver members not contributing annually it’s a heck of a lot of money left on the table. Simply contributing the minimum $1042.86 each year ensures you are about $35,000 better off over 10 years when invested in a growth fund, for example.”
The Government will pay 50 cents for every dollar of member contributions up to a maximum payment of $521.43. This means that you must contribute $1,042.86 annually to qualify for the maximum payment of $521.43. Employer contributions, government contributions and amounts transferred from Australia under the Trans-Tasman retirement savings portability don't count towards your $1,042.86 contribution.
If you contribute less than $1,042.86 from your pay, you can make voluntary contributions to ensure you receive the full payment from the Government. The contributions that earn this return need to have been made any time in the 12 months ending 30 June.
Paul says, ”We have close to 3 million KiwiSaver accounts that have been opened so far. As per last count we have over a million KiwiSavers who make no contributions into their account. Many are on savings suspensions, previously called holiday contributions, which allow savers to take a break from contributing. What many don’t come to grips with is that this is possibly the easiest 50% return on any savings you have ever made.”
· 2.9 million KiwiSaver accounts
· Over a million non-contributing accounts
· An estimated $35,000 in lost savings every 10 years of non-contribution, per KiwiSaver